Wednesday, April 29, 2009

Perhaps it was under the radar to some travel companies, but Priceline, well, TheNegotiator, was not only out there "pummeling hotel prices" on Twitter, but creating some travel news, as I reported in Travel Weekly, when it ratcheted up its followers by 400 percent in six days through an unusual hotel promotion.

Priceline went from 1,470 followers, before the promotion started on April 23, to some 7,400 followers on April 28, when it ended its $50 hotel-coupon offer.

TheNegotiator tweeted the following on April 23: “Negotiator Challenge! Help me get to 3,000 followers by May 1 and I will give a $50 Hotel Coupon to ALL of my followers! #travel #deals”

And, now, with the promotion completed, Priceline is manually sending DMs (direct messages) with the hotel-coupon details to qualifying followers at the pace of around 1,000 per day, which is apparently the limit that Twitter places on daily DMs.

Some three- and four-star hotels trying to move rooms on Priceline's opaque Name-Your-Own-Price channel will probably welcome the initiative.

The coupon gives followers $50 in bonus cash when they complete a successful bid for a 3-star or higher hotel room. The hotel stay must be for a minimum of three nights, the booking made by May 31 and travel completed by Dec. 31, 2009.

It's unclear at this juncture how many of these coupons will turn into incremental bookings, but I have to give Priceline credit for being willing to throw some money behind its Twitter coupon experiment as it tries to build long-term relationships with the Twitterati.

A lot of hotels and online agencies have found that they can use promotional codes and other tactics to drive traffic to their websites and to increase bookings.

Yes, Twitter isn't just a bunch of noise, but a viable business channel. Hellooooo.

Incidentally, TheNegotiator, with Priceline spokesman William Shatner as its marketing muse, has the perfect voice -- irreverent and engaging -- for social media.

Those companies and folks that view Twitter merely as an extension of their press releases will miss the proverbial boat, or Starship, that is.

Travel Weekly reported that Travelzoo scratched out a modest profit for the quarter on a significant revenue increase, which highlights the hunger for deals in the current market.

Bartel noted that Fly.com contributed -- not surprisingly for a fledgling metasearch site in beta -- negligible revenue to the company in the quarter, and attracted about 1 million searches since its Feb. 9 launch.

"So while we are very happy with the revenues overall for Travelzoo, there's not much that came from Fly.com," Bartel said, according to the unofficial transcript. "I think, for us, Fly.com is really an opportunity to link it up with Travelzoo to showcase deals on the Fly.com website. It will also allow us to make the deal content on Travelzoo better. That's the main strategy behind Fly.com, not so much as a completely brand new business activity that is by itself."

In other words, it sounds like the Fly.com metasearch effort merely serves as a platform to get more eyeballs for Travelzoo's core deals' business.

If Travelzoo views Fly.com metasearch as an after-thought, as a way to dress up Travelzoo's deal advertising, will Fly.com get the requisite commitment from management and plentiful development resources?

The wisdom of the strategy remains to be seen, but so far it looks like Travelzoo is providing adequate development resources and is creating an alluring product in Fly.com.

Although the layover-duration and flight-time filters on the flights' results pages almost look like Kayak clones, Fly.com has added other interesting features.

I particularly like the way some airlines on Fly.com have been merchandising themselves in some markets with graphical displays about their in-flight entertainment options, for instance, and a "calendar best price" pop-up, showing consumers the cheapest day of the month to travel, works for me, too.

However, it sounds from Bartel's comments during the call that Travelzoo may be hedging on its timetable to launch a U.K. version of Fly.com in the third quarter.

During yesterday's conference call, Bartel said: "Regarding specific timing of when we launch in Europe, there's no concrete time planned yet. We really hope we can do this sometime in summer, but nothing is concrete yet."

There also were a couple of other points in the financial gabfest yesterday that should elicit some concern.

Bartel noted that Travelzoo predominately uses a flat-rate model for deal advertisers, and with some travel companies "more risk-adverse" in the current climate, it means that "some advertisers are more hesitant to spend the money upfront."

He said Travelzoo therefore needs "to be very active in communicating" the value it delivers to suppliers and intermediaries.

But, Travelzoo's flat-rate model goes against the grain because advertisers are clamoring for performance-based models, a factor that could hurt Travelzoo unless it changes its way of doing business.

Also, Travelzoo, which launched in China in October 2007, posted a $1.7 million operating loss overall in Asia-Pacific during the quarter, and Bartel noted that "revenues were still very slim."

"So it's obvious that we need to think about what are we continuing to do," Bartel said. "How much are we continuing to invest? What other options do we have? It's a very natural and a very smart thing for a company like ours to do."

It looks like Travelzoo will shift some focus toward Japan, and views China as a target that may ripen for its efforts in a more protracted timeframe.

Tuesday, April 28, 2009

When it comes to the new availability of optional services data for the airlines' fee frenzy, the travel metasearch engines and online travel agencies (OTAs) are sweating the user interface (UI).

How do you cram the options into search choices and displays when checked-bag fees may be suited for apples-to-apples comparisons among airlines, but in-flight entertainment choices or paid seats may not?

The challenges for Kayak, FareCompare, Mobissimo, Farecast, TripAdvisor, CheapFlights and the OTAs is how to present a clean UI to consumers that would entice them to pick their optional-services preferences before they execute their search so travelers can take advantage of the new data without the metasearch engines and OTAs totally messing up the UI.

There also still is a technology debate, I'm told, concerning whether the new ATPCO standards are robust enough for airlines bent on those incremental revenue streams that optional services will generate.

Although 13 global airlines, ITA Software and Amadeus made some travel news by testing optional services' feeds with ATPCO, some carriers undoubtedly will build their own nonstandardized solutions, as did United Airlines, Midwest Airlines and Frontier Airlines with the Sabre GDS before ATPCO had completed its standards-crafting.

The GDS UI issue can be easier and more complex than the problem for the metasearch engines and the OTAs. On the one hand, putting optional services on green-screens and in the hands of travel professionals might be easier from a display perspective. On the other hand, the GDSs need to jump through hoops to make all this work with their legacy technology.

But, the more I think about it, the more I think that the issue is a chicken or the egg kind of question.

I think if the metasearch engines and OTAs succeed in creating clean, compelling UIs out of this admittedly morass of optional services choices, then a significant segment of travelers will take advantage of the choices.

That's because it is in consumers' interests to know what they will be paying for in advance, especially if the airlines are offering any new services that actually add value.

On that point, I like the comments yesterday in my blog by Sam Shank, the CEO of Dealbase.com.

Shank wrote: "I've long felt that if a la carte products are positioned as upgrades (vs. add-on fees), and strategically-placed within the purchase decision process, they'll represent a key new source of airline revenue. Metasearch, with their focus on innovation and rapid iteration, is the logical partner for airlines to roll this out to consumers."

He added: "As an air traveler, I'm looking forward to spending more money to have a better flight experience. But, if the only products offered are things I used to get for free, my wallet will remain shut."

Monday, April 27, 2009

Here's some interesting speculation I heard about Orbitz's decision last week to trim the fees it charges consumers for hotel bookings.

As you recall, in March Expedia got in Orbitz's face and eliminated consumer-booking fees on flights. That was a body-blow to Orbitz because about half of its profits come from these air-booking fees.

Well, Expedia gets about 19 percent of its profits from the fees Expedia charges consumers for hotel bookings. So, last week Orbitz, which has a much smaller hotel business than does Expedia, reduced its consumer fees for hotel bookings, and Expedia matched.

Orbitz's hotel move could not have been a welcome development in Bellevue, Wash., which is Expedia land, just as Expedia's decision to rescind fees on airline reservations assuredly caused a huge bellyache in Chicago.

Expedia: I'll raise you one airline fee.

Orbitz: I call your airline fee and raise you one hotel fee.

So, here's the speculation: Orbitz might be signaling to Expedia that it should restore its fees on flight bookings.

Expedia, Travelocity and Orbitz all eliminated the flight fees, but on a temporary basis. The fee eliminations run through the end of May, and many people assume they will become permanent.

But, as the signaling theory goes, if Expedia restores its consumer fees on airline bookings, then Orbitz might quietly bring back its hotel fees, perhaps in the second half of the year.

In that way, the potential "revenue death spiral," which is how Forrester Research analyst Henry Harteveldt characterized the OTAs' price wars, might be avoided.

One problem with this theory, however, is that Orbitz sees increasingly its hotel business as a strategic imperative and is about to embark on a marketing campaign related to its fee cuts on hotels and its related "total price" initiative.

But, let's see what happens around June 1, when all of the OTAs' airline-fee promotions end.

If the flight fees are restored and Expedia leads the way, maybe the travel-industry wag who speculated about this scenario is correct and someone at Expedia understood Orbitz's distress call.

Before the end of 2009, metasearch engines powered by ITA Software, and online travel agencies (OTAs) and airline websites pumped up by Amadeus and Travelport, likely will get the optional services data necessary to transform the flight-shopping process.

As I reported in Travel Weekly today, more than a dozen airlines, ITA Software and Amadeus are testing airline-fed data through ATPCO for services like checked bags, Internet access, premium seats, lounge access, onboard gin and tonics, and even portable oxygen. Travelport GDS, too, says it will get the feeds by the end of the year.

This bit of travel news is huge.

Here's why:

ITA Software is part of the metasearch guts behind Farecast, TripAdvisor, Kayak and FareCompare, and it also powers Hotwire and a host of airline websites, including Continental's and United's. These metasearch sites use ITA to get fare, schedule and availability data so they won't have to scrape airline websites and get into new legal scrapes.

And, Amadeus powers some of Kayak's and Expedia's global sites, as well as ebookers, Opodo and LastMinute.com. Travelport GDS, including Worldspan and Apollo, provides booking engines for Orbitz, CheapTickets, Priceline and many others.

With standards for optional services in place and ATPCO finished writing the code and transmitting the data to ITA Software and the GDSs by the end of the year, the way travel agents and consumers search for flights will be transformed.

A bit of the complexity in flight shopping will get simplified.

So, if enough airlines go ahead and agree to file their optional services information and the metasearch sites and OTAs take advantage of this data bonanza, consumers would be able to shop for flights by preferences.

Travelers would be able to search for flights, for instance, that offer pay-as-you-go exit-row seats, lounge access and Internet service and compare these to flights that offer similar services.

Metasearch engines that don't offer these apples-to-apples comparisons in their search-results grids, could use the data to enhance transparency in their fee-translators, such as TripAdvisor's Fees Estimator.

And, the OTAs could come up with similar solutions, although access to the same standardized data from the airlines doesn't mean that all the displays will be identical.

Access to the data is just an enabler. There is plenty of room for innovation, and at least one prominent metasearch site is working on its unique solution as of this writing.

OK, shopping for flights still will be complex and a pain in the butt, but access to the optional-services data at least will be a major step forward in navigating the fog of helter-skelter service offerings.

Next on the docket, the airlines and ATPCO will be working on filing data on branded fares, or fare families, but that is stage 2 in the process, and probably won't get implemented until 2010.

Sunday, April 26, 2009

OK, my marketing budget is ($43) -- the parenthesis depicts negative numbers -- and while everyone else is doing something worthwhile (as opposed to blogging) on this 91-degree day in the New York area, I thought I would share what some travel industry executives, luminaries and lowlifes (just kidding) are saying about the Dennis Schaal Blog.

Susan Black, a founder of TravelCom and owner of social-media consulting firm Susan Black Associates, on Twitter April 22: "Recommended @denschaal to @MrTweet 'his travel industry tweets are timely and provocative, and his blog is compelling.' http://cli.gs/jEWhpm"

WeJustGotBack, a family trip-planning site, on Twitter April 20: "I think @rickseaney and @denschaal each impart a valuable insider view of the industry. They know their stuff, so there's no hype."

Sam Shank, the founder of TravelPost and the current CEO of DealBase.com, on the DealBase Blog March 26: "With new flight metasearch engines from TripAdvisor and Travelzoo, and some great discussions about travel metasearch on UpTake and Dennis Schaal’s blog, there’s a consensus emerging that future of travel metasearch is providing a user experience that simplifies a la carte pricing (baggage fees, drink fees, etc)."

Jeff Pecor, Yapta.com PR director, on the Yapta Blog March 19: "The series of consumer friendly announcements from the online travel agencies has made Dennis Schaal, Travel Weekly's Technology Editor, say "Yapta-Yapta-Doo!" He also offers some great insight on "the likelihood" of receiving a reimbursement from these price guarantee programs. (Finally, somebody recognizes the slim odds behind what appears to be a pure marketing play.)"

Saturday, April 25, 2009

In March, Expedia eliminated air-booking fees, causing a lot of pain for Orbitz. And, last week, Orbitz made some travel news of its own when it reduced booking fees for hotels and began displaying the total cost of the booking in initial search results, presumably generating considerable angst at Expedia.

Here's how one travel industry insider views the booking-fee skirmish:

"Orbitz led with hotels to kick sand in Expedia's face. Same reason they dropped hotel fees. Since Expedia sells a lot more hotels than Orbitz, the reduction in fees will hurt them more than Orbitz (the inverse of the drop in air fees). Since most suppliers only show base fees, Orbitz (and other online travel agencies if they match) will look more expensive than hotel websites, at first blush. So some volume will be lost. That will hurt Expedia more than Orbitz."

Among other OTAs, Travelocity still is in assessment mode, and Priceline reduced its hotel-booking fees a year ago.

As I noted in the Dennis Schaal Blog a few days, ago, Orbitz's initiative is designed to build its nonair business, a strategic imperative that Orbitz Worldwide CEO Barney Harford was brought in to execute.

Yes, Orbitz's in-your-face move seemingly would hurt Expedia more than Orbitz because Orbitz's hotel business is way smaller than Expedia's.

And, by one estimate, Expedia garnered about 19 percent of its EBITDA last year from hotel-booking fees. The hotel business, in addition to advertising and media, is Expedia's growth-generator.

But, Expedia's hotel business already had been under substantial pressure before Orbitz's reduction in hotel-booking fees.

In Expedia's 2008 10-K, the company stated: "Industry sources forecast lower occupancies and year-on-year declines in ADRs [average daily rates] in 2009. These trends, combined with softer demand in a weakening economy and lower air capacity into our core leisure travel destinations, create a challenging backdrop for our hotel business, which has been a key source of revenue and profitability growth for Expedia."

So, the OTA play-for-keeps games continue. You can expect that Orbitz will mount an intense marketing campaign to tout its "total cost" hotel displays.

Harford gave us a taste of the likely talking points on the Orbitz Travel Blog. "We’re daring you to compare the Orbitz Total Price before booking your hotel anywhere else," Harford wrote.

Incidentally, the Orbitz Total Price initiative had to be in the works for several weeks. That would be the time needed to do the development work required to move total price displays for hotels from the details page to the initial search-results page.

And, the development work required may be one reason that Expedia and Travelocity haven't immediately parroted Orbitz on the hotel-display issue. It would take 30-45 days of code-writing, one industry strategy-decoder told me.

There is pressure on Expedia, Travelocity and Priceline to match Orbitz on total price in hotel displays. And, it's about time the OTAs got more consumer-friendly.

For example, Travelocity markets itself as a "customer champion" and it would be hard to see how it can remain couching the total price of hotels on its details page when the pressure is on and the Travelocity Customer Bill of Rights states that customers "have the right to unbiased information up front."

The OTAs, because of Dept. of Transportation (DOT) requirements, already display total price on flights. And, Travelocity led the way on total price for car rentals several years ago, with the other OTAs following in lock-step.

In addition to hotels, the OTAs' service fees on cruises, too, remain couched in "taxes and fees."

And, although Orbitz's decision to display total price on hotels up-front is a huge step in the right direction for consumers, all of the OTAs fall short on the transparency front because they still lump together "taxes and fees" in hotel bookings, leaving consumers in the dark regarding how much of a service fee they are paying.

With hotel-tax lawsuits against the OTAs raging across the country and the OTAs' disguising of their net rates on hotels still their unanimous mantra, don't expect any movement on the "taxes and fees" issue in the near future.

You might have to wait for a court order or a settlement for that issue to get resolved.

Meanwhile, it will be interesting to see next week, when Expedia releases its first quarter earnings results, what the business impact was of its eliminating flight-booking fees in the last couple of weeks of the quarter.

Did it pick up some share in the air business? Was there a steep revenue hit or did increased volumes fill the gap?

So, what is the next step in this OTA gotcha game?

An acquisition? A merger? Another frenzy of discounting?

Or, as Forrester analyst Henry Harteveldt cautioned to me: Will all of these fee cuts lead to a "revenue death spiral?"

Wednesday, April 22, 2009

Orbitz's move today to cut consumer booking fees on hotels, and to show the total price of hotels up-front in the search-results display, instead of at the end of the booking process, is a bold bid to build its hotel business and to reduce its historic reliance on low-margin flight sales.

In 2008, Orbitz garnered roughly 47.5 percent of total net revenue from non-air sales (largely hotels and vacation packages) and 39 percent from airline inventory. (The remaining 13.5 percent came from global distribution system, or GDS, incentives on air, car and hotel sales).

The consumer press, including Budget Travel's Blog, correctly are hailing Orbitz for "tellin' it straight" by showing the fees up-front.

This disadvantages Orbitz at the moment on metasearch websites like Kayak because the total price of hotels through Orbitz and sister company CheapTickets may appear to be higher than competitors' rates on other websites because of apples to oranges comparisons.

Orbitz's decision could be a game-changer on the consumer level because it may change the way travelers shop for hotels -- especially if Expedia and Travelocity match the move. And, I expect they will in some form.

But, the initiative will not move mountains in terms of Orbitz's competitive position. And, I'm betting that Orbitz doesn't expect that it will. In the Orbitz executive suite, the decision-makers clearly believe the competition will match Orbitz's thrust, and parallel booking-fee cuts already may be in the works.

Expedia is the king-maker in the online hotel business and has more resources at its disposal, in the form of more inventory and higher margins, than does Orbitz so I don't expect a major share shift.

Orbitz doesn't have the breadth of hotel inventory that Expedia does, and I doubt that this move will help them make progress on this front.

And, Priceline cut its hotel booking fees in July, and already has been making inroads in hotel sales.

Still, Orbitz's fee-cut and new hotel display should help it improve its consumer image and build up that nonair revenue -- and that is a strategic imperative. Expect a big marketing campaign in tandem with the "Hotel Fee Cut" and "Total Price" promotion.

However, from a business perspective, the booking-fee wars, initiated by Expedia when it removed its booking fee on flights in March, may end up hurting all of the online travel agencies.

"Total Price" is great, but let's hope that the OTAs don't get "totalled" in the price wars.

Tuesday, April 21, 2009

Delta Air Lines CEO Richard Anderson, waxing poetic about the future of travel distribution, today echoed earlier comments by American Airlines CEO Gerard Arpey that global distribution systems (GDSs) and travel agencies would one day pay for flight inventory instead of airlines paying distributors and intermediaries.

A Travel Weekly story by Michael Fabey quotes Anderson as telling analysts during Delta's first-quarter financial results conference call: "Over time, the industry will evolve. People will pay us for our content."

As I wrote in the Dennis Schaal Blog several days ago, Arpey of American Airlines articulated a similar plan, one that might be dubbed, "The American Dream."

Well, revolutionizing the distribution formula "over time," as Anderson put it and Arpey apparently also believes, can take quite awhile.

Anderson's comments came the same day as Travelport GDS announced that it reached a content agreement with Air France KLM that runs through March 2013.

And, in November Sabre announced that it had extended its current agreement with United Airlines through 2013.

Unless Delta and American want GDSs and travel agencies to preference United's flights instead of Delta and American itineraries, something else is going on here.

Major airlines undoubtedly will push hard for lower distribution costs when the next round of negotiations over content agreements gets under way in a couple of years.

And, they probably will succeed in lowering their costs even more than they did in the previous round.

But, making the GDSs and travel agents pay for the right to distribute -- this isn't on the agenda in the real world.

However, airlines' posturing as a precursor to negotiations always is on the agenda and certainly can't hurt the carriers' negotiating stances.

With these comments in the last few days, Delta and American are laying the groundwork.

Monday, April 20, 2009

By this time next year, and at some metasearch and online travel agency websites much sooner, consumers will be able to shop for flights with optional services like checked bag fees and charges for aisle or exit-row seats included in the price before booking.

It's coming.

Consumers will be able to make apples-to-apples comparisons of flights among various airlines that offer similar ancillary services with the fees included in fare displays during the research phase.

These fees will appear in fare-grid displays or in tools more comprehensive than TripAdvisor's Ver. 1.0 Fees Estimator.

You could start seeing some of this stuff before the end of the year.

Perhaps a bit later, the OTAs and metasearch sites also will get access to airline's fare families like Air Canada's Latitude or Tango fares or Frontier Airlines' AirFairs.

But, flight shopping will remain complex.

When a slew of airlines -- and this is coming too -- decide to opt out of offering products and services strictly on an a la carte basis and start bundling them into a hodge podge of new fare brands, it's going to be "very messy," one insider told me.

Continental plans to exit the SkyTeam Alliance "promptly" and join the Star Alliance, according to a Continental email I received, when the airline's last flights are on the ground Oct. 24.

But, now comes word that the European Commission launched two investigations of Air Canada, Continental, Lufthansa and United regarding their agreements in the Star Alliance, and the EC also is probing American Airlines, British Airways and Iberia over similar issues in Oneworld.

The Reuters story quoted EU spokesman Jonathan Todd as saying: “When you have cooperation between airlines in such areas as pricing, schedules and capacity, we have to make sure that the consumer actually benefits."

Reports indicated that the level of cooperation/coordination envisioned in some of these agreements exceeds what has been the norm in airline alliances.

Continental's email to OnePass members stated: "In June 2008, Continental announced plans for extensive commercial cooperation with United Airlines and Star Alliance, linking our networks and services worldwide to deliver new benefits to our customers. On April 7, 2009, the U.S. Department of Transportation tentatively approved the application for Continental to join the existing antitrust immunized alliance between United and eight other Star Alliance member carriers on international routes."

It doesn't appear that the EC probes would endanger Continental's planned "smooth as possible" transition from SkyTeam to the Star Alliance.

But, it remains to be seen -- and the EC investigations reinforce the urgency of the issue -- whether this alleged degree of "extensive commercial cooperation" among the airlines in question actually will benefit travelers or give the airlines more power to reduce competition.

Thursday, April 16, 2009

In AMR Corp.'s first quarter earnings call yesterday, CEO Gerard Arpey spoke of his "long-term vision" to make travel agencies and global distribution systems (GDSs) pay for the privilege of distributing American Airlines' flights rather than the reverse.

And, even short of that goal, the move could be, well, priceless.

Arpey was quoted as saying: "Tom [CFO Thomas Horton] can jump in here, but I think the same approach that we’ve taken here in the U.S. certainly lends itself to the international distribution of our tickets where we’re still paying much higher levels of commission and booking fees, etc., and I think a lot that hinges on the use of technology and the competitive environment because a lot of those commissions or overrides or booking fees are paid in order to stimulate traffic and if we can, as an industry, do a better job keeping the supply of seats in line with the demand, I think that will help us on those fronts."

Warming to the topic, Arpey spoke of his dream: "So I think there are significant opportunities around the world to make the kind of progress that we’ve made here in the U.S. and not to be too dramatic but I can see a day, and maybe I’m dreaming here, where those folks who are the intermediary between us and our customer, have to pay for access to our product rather than us paying them to distribute our product. So that would be my long-term vision."

Any airline, GDS or travel agency executive in the U.S. recalls the distribution dramatics of 2005 and 2006, when the airlines threatened surcharges and radically cut the distribution fees they paid to GDSs and the incentives that Sabre, Galileo, Worldspan and Amadeus passed on to travel agencies.

Well, Arpey is signalling two things:

1) American Airlines, and others no doubt, are set and already are trying to export to the international arena the slash- and-burn distribution tactics that they successfully employed in the U.S. several years ago.

2) In the U.S., the next round of GDS-airlines booking-fee negotiations in a couple of years may make the prior face-off look like amateur night.

Airlines, of course, have every right to trim their distribution costs to reasonable levels. Before GDS deregulation, the GDSs used their clout and virtual monopoly power to tack on excessive fees to airlines that had little bearing to actual costs.

But now, as Arpey's comments show, the airlines are poised to try to force intermediaries to distribute flights to airline customers for free -- or, taking it to dream-like proportions -- to make online travel agencies, traditional agencies and GDSs pay for access to flights, which, of course, the airlines control.

Between Sabre, with its still-sizable distribution grip, terminating its relationship with Farelogix, and airlines poised to wield their hold over flight inventory to pummel intermediaries, it almost -- but not quite -- makes one wax nostalgiac about the days when these sectors were regulated.

The disruption that the travel industry faced in 2005 and 2006 would be considered a tremor compared with the earthquake that would occur if the airlines succeed in forcing through payless distribution in the next round of contract talks.

These days, the brouhaha may not sell a lot of newspapers, but it would drive a lot of traffic to travel news websites.

Meanwhile, another interesting point about American's first quarter results, is that although AMR's revenue declined 15 percent to $4.8 billion, those checked bag fees and other ancillary services indeed are paying off.

American's revenue from change fees, on-board meals and checked bag fees jumped 6.9 percent to $558 million in the quarter.

In the American (Airlines) Dream, those feels increasingly will be in the picture.

Tuesday, April 14, 2009

Research from Google, Uptake.com and TIA/American Express makes me feel that traditional travel agencies, namely those we sometimes refer to as off-line agencies, can seize an opportunity in all of the complexity in online trip-planning.

Sure, airline commissions are gone, the Web and the marketing clout of online travel agencies have helped put traditional agencies under tremendous pressure, but there are business opportunities for agencies that engage consumers in new ways and take advantage of the pain-in-the butt that online-travel planning has become.

Consider this:

In a presentation at the recent TravelCom conference in Atlanta, Rob Torres, Google's managing director for travel, said Google research found that travelers spend 6.7 weeks searching for trips and they visit 8.1 websites on average before booking.

And trip-planning site TravelMuse recently cited statistics from UpTake.com that consumers visit 25 websites on average "when planning a single vacation."

TravelMuse also cited an August 2008 study by TIA and American Express which found that 20 percent of travelers put in more than 10 hours of online-travel planning in researching their trips.

Who has that kind of time?

It's a jungle out there, whether it is researching a safari vacation or any other kind of getaway.

It all reminds me of Priceline CEO Jeffery Boyd's appearance at a PhoCusWright conference in 2004 when he facetiously called for the formation of a new website, which he dubbed FarePile.com, to aggregate the offerings of metasearch aggregators like Kayak, SideStep, FareChase and Mobissimo.

And, the complexity of the trip-planning process isn't getting any easier with the advent of ancillary services and sometimes-hidden fees for checked bags, premium seats and lounge access.

In contrast, I emailed a traditional travel agency the other day about a trip to Israel, and the agency emailed me back letting me know that I could fly out of Newark and return to JFK for $897 on El Al, or I could take Austrian Airlines out of JFK with a stop in Vienna for around $777.

Simple as that. It probably would have taken me hours of frustrating searches and price comparisons to find these fares on my own. And, that's even before considering lodging choices and a car rental.

So travel agents have an opportunity if they can better market themselves as experts, traveler advocates and simplifiers of the trip-planning process.

Will they do it in new and creative ways?

Most probably won't, but the smart ones will. I see plenty of travel agencies promoting themselves and getting involved with consumers on Twitter and Facebook.

Imagine how you or your children might look to TSA screeners if the images above were to be enlarged.

The TSA claims it won't save the images, but one can only imagine the possibilities for abuse.

It's a tough issue. Are there better alternatives? Are there safeguards that could be put in place? Will some of these images somehow end up in the tabloids or in some no-fly list somewhere?

Will such an invasion of privacy give people another reason not to travel?

The TSA claims that emission levels from millimeter wave imaging are safe, 10,000 times less than a cellphone transmission. I don't necessarily trust governmental estimates on these sorts of things, however.

A bunch of airports internationally in Europe, Asia and Mexico already are using the technology.

Friday, April 10, 2009

I like the Red Sox, but didn't know a thing about the team's historic Royal Rooters, a scattershot collection of brewski and baseball buffs that traced their origins to 1897, until Ted Kennedy threw out the first pitch on opening day at Fenway Park the other day.

It turns out that Kennedy's grandfather, John "Honey Fitz" Fitzgerald, the mayor of Boston, threw out the very first pitch at Fenway Park in 1912. The Kennedy grandad was a member of the Royal Rooters.

I'm glad to see some travel-industry suppliers are forward-looking and doing some things that blend nicely with environmental demands.

Thus, Connect by Hertz just made a bit of travel news and acquired the Paris-based company, Eileo, which provides all sorts of back-office technologies for the car-sharing industry.

Hertz obviously sees a future and a winning business proposition in car-sharing.

Connect by Hertz, which enables you to input your Connect card and rent EPA SmartWay-certified vehicles for as low as $8.50 an hour, seems like an attractive, environmentally friendly solution for businesses and people located in congested cities who choose not to own a car or pay exhorbitant parking-garage fees.

Hertz claims that each Connect by Hertz car on the road puts 14 other vehicles curbside. I can't verify that claim, of course, but am willing to believe that car-sharing makes environmental sense. And, I'd love to see some Hertz documentation for that claim.

I had to admit that Connect by Hertz wasn't high on my radar until recently, but I see it is getting fairly good reviews in the blogosphere, including this post by Robbie Mitchell.

Thursday, April 9, 2009

The ancillary revenue drama continues with another bit of travel news out of the U.K.'s Luton Airport, which is set to introduce a passenger drop-off fee.

Drivers who decide they don't want to pay the fee would have to park in the boondocks [an Americanism that means a parking lot in the stratosphere] when depositing travelers at Luton.

The airport already charges fees for luggage carts, clear plastic bags to get liquids through security and fast-lane security access.

But, now easyJet and at least one other airline have seen enough of these ancillary-service fees -- at least when it is an airport that's collecting the revenue.

"Whatever next?" e-tid.com quotes easyJet spokesman Andrew McConnell as saying. "We have seen charges for fast track security and plastic bags. Now they want £1 for dropping somebody off at the airport.

"This new scheme is a recipe for traffic chaos, which will see people stopping on double yellow lines or parking in the bus lane. Passengers already pay to use the airport facilities as part of their air fare."

One might ask the airlines, too, what's next? Many airlines believe it's OK for them to charge a bevy of fees for heretofore free services, but now they are balking when an airport gets in on the action.

To use another American idiom: It seems to me "like the pot calling the kettle black."

That is a bargain, of course, considering all the information available about increasing the airline industry's estimated $3.5 billion annual take from such nouveau services that heretofore had been available for free.

Anyway, times are tough, so here's my plan, unsolicited of course, for conference organizers.

Charge participants that $1149 fee, but when they arrive at the event, let them know that seating in the main conference ballroom will be $350 extra. If they don't want to pay the fee, there will be plenty of standing room.

No worries.

And, if they want a front-row seat with extra legroom, or an aisle seat for easy exiting from the main lecture hall, then tack on an additional $200.

Conference delegates, of course, will be happy to pay for this extra value. Even if they only find out about it after they book their conference attendance.

Transparency? What's that?

All of this unbundling of conference pricing will be worth it because the conference promises to "guide attendees towards increasing this huge [$3.5 billion] revenue source, as well as how to sustain this revenue over the long-term."

And, if one of the conference keynote speakers gives an especially illuminating talk about the next horizon in charging for meals on jetplanes, then charge conference attendees an additional $75 for downloading the presentation.

Again, it's a bargain.

And, while they are at it, conference organizers might want to sell anonymous data about conference registrants to third-party advertisers, including credit card companies and stock brokers.

The conference attendees would appreciate being targeted as part of this new, behavioral advertising trend because the advertisers are providing their prey, I mean their customers, with valuable products and services.

After all, airlines are planning to target their passengers with such advertising when they view in-flight entertainment on their seatbacks.

And, if conference organizers feel especially altruistic after bumping up revenue from attendees, they might want to consider throwing in a few freebies, including perhaps some complimentary sodas or napkins.

There's nothing like building customer loyalty after playing the ancillary-services game.

Tuesday, April 7, 2009

OK, even with Orbitz's decision earlier today to remove consumer booking fees on most flights, I don't think that flight metasearch is dead.

And, neither does Yen Lee, the president of Up Take, who triggered a lot of great discussion and travel news on the topic through his post on the Up Take Travel Industry Blog, outlining how flight metasearch is in for some tough sledding because of a lack of price differentiation among online travel agencies (OTAs) and suppliers.

So, somewhat ironically, with Orbitz joining Priceline, Expedia and Travelocity in dropping consumer booking fees on flights, at least through the end of May, the OTAs, as a group, gain something of an advantage.

That's because airlines, with their all-out push to get consumers to book directly on the carriers' own websites, lose the price advantage they had over the OTAs because the airlines weren't charging booking fees and most of the OTAs, up until a month or so ago, were tacking on the extra $7 or $11 fees.

So, now, the playing field between the OTAs and airlines in metasearch tools like Kayak, Fly.com, Farecast and TripAdvisor, and elsewhere, is relatively even.

The airlines will still milk their advantages, prodding consumers to book on airline websites if travelers want access to various perks and ancillary services -- bag fees, premium seats -- and hopefully some more attractive products in the future.

But, when consumers shop for airline tickets, they will see that the $235 Delta.com fare is now also available on Orbitz.com or Cheaptickets.com for $235, as well.

As I wrote a few days ago, the Orbitz decision had been expected and will hurt Orbitz because the company is so reliant on air-booking fees for its profits. Unlike the three other OTAs, which are much further along in their hotel and vacation-package businesses, Orbitz, the child of major U.S. airlines, still is too heavily skewed toward selling airline tickets.

Kayak and other metasearch companies will be under pressure, too, because the OTAs will have about $300 million less available to spend on their advertising in the metasearch arena. The $300 million was one analyst's estimate of how much the OTAs took in annually in booking fees.

So, in sum, with booking fees gone, the OTAs gain some ground on airline sites, the metasearch companies will continue building their own hotel and related media businesses as revenue from flight metasearch becomes more challenged, and Orbitz itself, with its stock hanging by a thread at around $1.35 per share, is in a fight for its survival.

Last week, Brad Gerstner, a former NLG exec who founded Altimeter Capital Management, predicted that Expedia might swallow up Orbitz, or perhaps Orbitz would combine with Travelocity.

Indeed, metasearch is not dead. It will continue to evolve as it finds ways to enable OTAs and suppliers to differentiate themselves and to create some order out of the currently, very-disorderly consumer booking experience.

I just found out, through the Shearwater Blog, that the latest bit of travel news in airlines' drive for ancillary revenue and behavioral advertising is that carriers will be delivering targetted ads to passengers through the airlines' in-flight entertainment systems.

If I hadn't just read up on it, I would have thought this was a "Saturday Night Live" parody.

But, Jetera Precision Media, a Danbury, Conn., company owned by Venture Capital and Consulting Group and with former Southwest Airlines CEO Jim Parker on the board, just put into production an ad delivery and targetting system that combines reservations data about travelers' intent with publicly available information about individual passengers to serve up ads tailored to that passenger on seat-back TV systems.

It is unclear at this point which specific companies are selling Jetera their reservations data.

But, here's how it works. In a FAQ on its website, Jetera explains: "The reservation information comes from any one of the multiple travel e-commerce sites, hotel and airline reservation systems. Then by partnering with some of the largest publicly available consumer data companies in the world we enrich that reservation data. The result is that we can then ultimately offer, for the first time, marketers and brands an unmatched level of relevancy, timeliness and action-ability."

It looks like the reservations data would be coming from "Airlines, Global distribution systems (GDS), Large Travel Companies, Hotels and Vacation Ownership Companies, Rental Car Firms, [and] Cruise Ships" because Jetera aims to partner with these travel suppliers and distributors in addition to marketers and advertising partners.

As I wrote yesterday and March 24 in the Dennis Schaal Blog, and recently in Travel Weekly, Expedia, Google, BlueKai, and others with travel industry ties are working hard to further commoditize travelers' reservation data to deliver targetted ads to you when you surf the Web and now, it turns out, some marketers will be going after you in your aisle or window seat, too.

It's all to the advantage of the traveler, goes the refrain. Marketers are telling travelers that advertisers are almost providing passengers with a public service when those ads for cellphones or credit cards bombard you during your travels.

And, oh, "Yes," Jetera explains, "passengers will be in complete control and have multiple opportunities to opt out should they choose to do so."

It sounds to me as if such behavioral advertising may become so omnipresent that efforts to opt out could become a full-time job.

Monday, April 6, 2009

Get ready for a massive backlash against behavioral advertising, the push to target consumers across the Web based on their cookie data. I recently wrote about Expedia's foray into selling cookie data to third parties in the U.S.

Now, it turns out, the European Union is slated to investigate online advertising practices against the backdrop of many people expressing outrage that consumers' privacy rights are being bashed in the latest targetting practices.

The Shearwater Blog, meanwhile, is reserving judgment on some of the particular advertising practices that triggered the EU's focus.

The EU authorities appear to be ahead of the game in these privacy matters as compared to their U.S. counterparts.

Or maybe not.

The Guardian reported that new EC regulations require Internet Service Providers to keep certain records of consumers' e-mails and Web-based phone calls.

I wonder if the EC is going to investigate itself on this privacy issue, as well.

At any rate, I believe we'll be hearing a lot more about online privacy issues in the U.S. in the coming months and years as they relate to travel e-commerce and the online retail industry in general.

In the U.S., Google recently began a behavioral advertising program, but it doesn't go as far as Expedia's PassportAds program in that Google does not sell consumers' cookie data to airlines, hotels or any other third parties.

But, it is only a matter of time before this behavioral trend gains more traction unless a groundswell labels it as misbehavior.

Sunday, April 5, 2009

Sockless Steve Hafner, the Kayak co-founder and CEO, can be brash, insightful and a laugh riot. At the recent TravelCom conference in Atlanta, for instance, he said metasearch is a lousy business because of its thin margins, that Kayak's TravelPost hotel-review business had an even worse business proposition, and that gaining global traffic and scale is the whole ballgame.

"Any donkey can build a metasearch site," Hafner said.

One can debate the pros and cons of Hafner's style.

But, I am definitely a fan of the Kayak.com website's style.

Consider that its privacy policy and terms of use are listed under the heading, Mumbo Jumbo.

On a Kayak Blog post about the launch of a Kayak iPhone app, Kayak writes: "That’s the most important part of this post. We have an iPhone app, if you have an iPhone and you travel, you should download it. The rest of this article is the story of how we made the iPhone app. If you are not a software developer, the intense boredom rays emitted from the information herein is likely to melt your temporal lobe. You’ll wake up in two or three hours with a face full of keyboard and a keyboard full of drool."

And, what really inspired me to write my post about the Kayak style is the site's description of its team. Kayak is known for the filters it offers consumers, giving them the ability to select or deselect individual airlines, airports and layover durations etc.

And, the page depicting Team-Kayak.com also has its filters. Among other choices, you can filter in and out the Nerds and the Capitalists among the leadership team.

Looks like the team is bereft of Nerds because no team members showed up using that filter.

However, if you select Capitalist, then the pics and titles of Keith Melnick, executive vice president of business development, and Hafner are displayed.

Well, let's hope that Hafner and Melnick and chief of geekdom Paul English can build up those global volumes that they've been working on.

Otherwise, Hafner's Capitalist status would be in jeopardy.

Well, probably not, but ...

Anyway, the site's verbiage is irreverent and refreshing. In that regard, I like Kayak's style.

And, incidentally, for those companies just starting to delve into social media, I think it is this sort of style that is the most compelling in a bunch of situations.

Friday, April 3, 2009

Continental, the official airline of the Houston Astros baseball team, hits a foul ball, in my opinion, with a print advertisement in its in-flight magazine topped with the headline: "Grow Young with HGH."

Human Growth Hormone, after all, is banned in Major League Baseball and condemned by MLB Commissioner Bud Selig.

I saw the ad yesterday when I flew Continental home to New Jersey from the TravelCom conference in Atlanta.

The advertisement, from BIEHealth.US, is not for synthetic HGH, but for GHR (Growth Hormone Releaser), which is said to be a natural supplement that prods "your pituitary to secrete extra HGH and then accentuate them to full potential with a proper diet and HGH-releasing exercises," according to the website.

Some of these anti-aging products, with their hyperbolic claims, have been condemned by the Federal Trade Commission, although I couldn't find a specific complaint about GHR.

Still, the ad in Continental's in-flight magazine refers to GHR as "the Reverse Aging Miracle" and goes on to say how HGH reverses hemorrhoids, arthritis and angina.

Wow, if only all those professional baseball players, believed to be weaned from steroids and possibly taking HGH, would opt for this natural HGH-releaser instead and perform workouts heavy on the "HGH-releasing exercises."

Thursday, April 2, 2009

Orbitz Worldwide President and CEO Barney Harford told participants at the TravelCom conference in Atlanta yesterday that the company didn't want to be rushed into a decision about booking fees and was still evaluating the situation. "Stay tuned," Harford said.

I'm hearing from a non-Orbitz insider that some kind of Orbitz announcement, in the wake of Expedia and Travelocity killing booking fees on flights, had been imminent yesterday, but didn't materialize.

Orbitz's fence-sitting and condundrum is so pronounced, I'm told, that in its deal-making overtures with at least one metasearch company, Orbitz's proposals include one with booking fees and one without.

What would it mean if it filed for Chapter 11 bankruptcy protection, reorganized, and dropped booking fees? That could be one radical option being mulled, although I have no idea how seriously that might be being vetted. That wouldn't be a very pleasant option as far as building consumer trust, but Orbitz, reliant on the booking fees, is in a very tight spot.

Orbitz is loaded down with debt, dependent on booking fees, and locked into disadvantageous agreements with Big Brother Travelport.

There has even been some speculation about some kind of Orbitz-Kayak combination, which doesn't make much sense to me.

Meanwhile, Orbitz, the exclusive online travel agency participating in Kayak, would be hard-pressed to compensate Kayak, which gets a chunk of revenue from Orbitz, if Orbitz decides to toss its booking fees.

Kayak CEO Steve Hafner indeed predicts that Orbitz has no choice but to drop booking fees.

Wednesday, April 1, 2009

Joe Sharkey wrote an interesting story in yesterday's New York Times, speculating that frequent flyers with lower levels of elite status may see some of their perks evaporate as airlines try to merchandise everything bolted and not bolted-down on the plane.

If these road warriors get priority boarding or exit-row seating as part of their elite perks for free, will the airlines ditch the freebies they give business travelers in favor of a non-elite traveler who may want to pay $15 or $20 for the premier seat, Sharkey wonders.

He even speculates that some of these new pay-as-you-go ancillary products, as they are known, may go up for auction, with the exit row seats going to the highest bidders.

Will we see a sort of Priceline system for priority boarding, premier seats and lounge access?

In that regard, I like a tweet I saw this morning written by Gregg Brockway, CEO of TripIt, from the TravelCom conference in Atlanta. He tweeted: "Enjoying #TravelCom. The upstarts generally seem happy and the establishment pained. Creative destruction at work?"

Brockway wasn't referring to airline merchandising, but I like the "creative destruction" reference.

In the next few years, airlines' souped-up merchandising efforts are going to bring a lot of disruption, altering the way travel is bought and sold on the Web and offline, too, for business travelers and just plain folks.

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I've followed online travel, its twists, turns and detours, since the beginning (not Adam and Eve, but Rich and Terry), and will follow the aforesaid in this blog. I'm North America editor of Tnooz and I write USA Today's Digital Traveler column. Things not in my resume: I visited Orbitz headquarters pre-launch in 2000 and, left unattended, eavesdropped and examined the whiteboards to learn partnership details; Travelocity's ex-CEO Michelle Peluso credits me with her success (Wharton notwithstanding) after I wrote a sentence (with accompanying photo) mentioning that some of her Site59 women wore fishnet stockings and then airline execs kept the phone lines busy; I once drove to tiny Sherman, Conn., to see where PhoCusWright lives; and I was a nachtportier in a West Berlin hotel in the days (Btw) when a nasty wall split the city. Fyi, the previous stuff wasn't necessarily in chronological order.

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The opinions I express in the Dennis Schaal Blog are my own. Only I could think of this stuff. The opinions uttered or written here in no way reflect on the views of past employers, current partners, future associations (how could they anyway?) or my first-grade teacher, Mrs. Slayton. I don't have a lawyer, but if I had one, he or she probably would have told me to write something like this. Well, maybe not exactly. The Dennis Schaal Blog is Copyright (c) 2009 by Dennis Schaal. All rights reserved.